Science Applications International Corp

Previous wording

We are a leading technology integrator providing full life cycle services and solutions in the technical, engineering and enterprise information technology ("IT") markets. We developed our brand by addressing our customers’ mission critical needs and solving their most complex problems for over 50 years. As one of the largest pure-play technology service providers to the U.S. government, we serve markets of significant scale and opportunity. Our primary customers are the departments and agencies of the U.S. government. We serve our customers through approximately 1,700 active contracts and task orders and employ approximately 24,000 individuals who are led by an experienced executive team of proven industry leaders. Our long history of serving the U.S. government has afforded us the ability to develop strong and longstanding relationships with some of the largest customers in the markets we serve. Substantially all of our revenues and tangible long-lived assets are generated and located in the United States.

Current wording

We are a leading technology integrator providing full life cycle services and solutions in the technical, engineering, and information technology ("IT") markets. We have developed our brand for over 50 years by addressing our customers’ mission critical needs and solving their most complex problems. As one of the largest pure-play technology service providers to the U.S. government, we serve markets of significant scale and opportunity. Our primary customers are the departments and agencies of the U.S. government. We serve them through approximately 1,700 active contracts and task orders, employing approximately 23,000 individuals led by an experienced executive team of proven industry leaders. Our long history of serving the U.S. government has afforded us the ability to develop strong and longstanding relationships with some of the largest customers in the markets we serve. Substantially all of our revenues and tangible long-lived assets are generated and located in the United States.

Previous wording

We have five customer facing business groups supported by the enterprise organizations, including the Innovation Factory. The five business groups, which are also our operating segments, are aggregated into two reportable segments for financial reporting purposes given the similarity in economic and qualitative characteristics, and based on the nature of the customers they serve. Our two reportable segments are the Defense and Intelligence segment and the Civilian segment.

Current wording

We now have three customer facing business groups which are also our operating segments. They are aggregated into two reportable segments for financial reporting purposes given the similarity in economic and qualitative characteristics, and based on the nature of the customers they serve. Our two reportable segments are the Defense and Intelligence segment and the Civilian segment.

Previous wording

The Defense and Intelligence segment provides a diverse portfolio of national security solutions to the Department of War ("DoW", formerly referred to as the Department of Defense) and Intelligence Community of the United States Government.

Current wording

The Defense and Intelligence segment provides a diverse portfolio of national security solutions to the Department of War ("DoW", formerly referred to as the Department of Defense) and the Intelligence Community of the United States Government, supporting a variety of missions across land, sea, air, and space.

Previous wording

The Civilian segment provides solutions to the civilian markets, encompassing federal, state, and local governments, in order to deliver services for citizen well-being, border security, and protecting lives. This includes integrating solutions into a spectrum of public service missions that impact travel, trade, health and the economy.

Current wording

The Civilian segment provides solutions to the civilian markets, encompassing federal, state, and local governments. This includes integrating solutions into a spectrum of public service missions that impact travel, security, trade, health and the economy.

Previous wording

The offerings of both reportable segments entail the integration of emerging technologies into mission critical operations that modernize and enable national imperatives, including IT modernization, digital engineering, artificial intelligence ("AI"), mission systems support and advisory, training and simulation, and ground vehicles support. These services include end-to-end solutions spanning the design, development, integration, deployment, management and operations, sustainment and security of the customers’ entire IT infrastructure.

Current wording

The offerings of both reportable segments entail the integration of emerging technologies into mission critical operations that modernize and enable national imperatives. These services include end-to-end solutions spanning the design, development, integration, deployment, management, operation, sustainment, and security of customer hardware and software platforms.

Previous wording

Our Innovation Factory supports the operating segments by developing enterprise-class solutions which are delivered to our customers as stand-alone solutions or integrated with and aligned to our product offerings through the operations of the business to meet complex customer needs and accelerate digital transformation. The Innovation Factory includes designated teams focused on AI, application development, network services, platforms and cloud, engineering, and cybersecurity. It uses a highly automated, cloud-hosted tool set to rapidly build, test and deploy solutions and works with customers to enhance solutions going forward.

Current wording

Our Solutions and Technology Group ("STG") supports the operating segments by developing enterprise-class solutions to meet complex customer needs and accelerate digital transformation. These capabilities are delivered to our customers as stand-alone solutions, or integrated with our product offerings through the operations of the business. The STG includes designated teams focused on artificial intelligence, application development, network services, platforms and cloud, engineering, and cybersecurity. It uses a highly automated, cloud-hosted tool set to rapidly build, test, deploy and continuously enhance solutions.

Previous wording

During the three and nine months ended October 31, 2025, we generated 98% of our revenues from contracts with the U.S. government, including subcontracts on which we perform. Our business performance is affected by the overall level of U.S. government spending and the alignment of our offerings and capabilities with the budget priorities of the U.S. government. In March 2025, the President signed a continuing resolution ("CR") that extends government funding through the close of government fiscal year ("GFY") 2025. The measure provides budget certainty for agencies through September 30, 2025. The CR also provides flexibility for new starts on programs at the DoW, which are typically not allowed under CRs.

Current wording

During the three months ended May 1, 2026, we generated 97% of our revenues from contracts with the U.S. government, including subcontracts on which we perform. Our business performance is affected by the overall level of U.S. government spending and the alignment of our offerings and capabilities with the budget priorities of the U.S. government.

Previous wording

The U.S. government administration has put in place a number of executive orders and actions which could affect our business. In addition, the Department of Government Efficiency is driving changes in the structure and priorities of Federal agencies. Agencies are conducting comprehensive reviews of existing and new contracting activity to identify potential efficiencies or nonalignment with new Administration priorities. Our contracts have been, and will continue to be, subject to these reviews. We have not experienced a material financial statement impact from recent executive orders or program cancellations across the government. However, ongoing reductions in personnel, changes in agency alignment, required reviews of new contracting activity, decreases or delays in new or existing contract awards and in government spending on the types of programs that we support, and terminations or stop-work-orders and delay in funding on government contracts on which we are currently performing could adversely affect our future revenues, cash flows, and profitability.

Current wording

The U.S. government administration has put in place a number of executive orders and actions which could affect our business. In addition, the U.S. government performs an ongoing evaluation of the structure and priorities of Federal agencies. Agencies are conducting comprehensive reviews of existing and new contracting activity to identify potential efficiencies or nonalignment with new Administration priorities. Our contracts have been, and will continue to be, subject to these reviews. We have not experienced a material financial statement impact from recent executive orders or program cancellations across the government. However, ongoing reductions in personnel, changes in agency alignment, required reviews of new contracting activity, decreases or delays in new or existing contract awards and in government spending on the types of programs that we support, and terminations or stop-work-orders and delay in funding on government contracts on which we are currently performing could adversely affect our future revenues, cash flows, and profitability.

Previous wording

Adverse changes in fiscal and economic conditions could materially impact our business. Some changes that could have an adverse impact on our business include adverse regulations, the implementation of future spending reductions (including sequestration), government shut downs, delayed passage of appropriations bills resulting in temporary or full-year continuing resolutions, extreme inflationary increases adversely impacting fixed price contracts, and potential government shutdowns.

Current wording

Adverse changes in fiscal and economic conditions could materially impact our business. Some changes that could have an adverse impact on our business include the implementation of future spending reductions (including sequestration), delayed passage of appropriations bills resulting in temporary or full-year continuing resolutions, inflationary increases adversely impacting fixed price contracts, and potential government shutdowns.

Previous wording

Despite the budget and competitive pressures affecting the industry, we believe we are well-positioned to protect and expand existing customer relationships and benefit from opportunities that we have not previously pursued. Our scale, size, and prime contractor leadership position are expected to help differentiate us from our competitors, especially on large contract opportunities. We believe our long-term, trusted customer relationships and deep technical expertise provide us with the sophistication to handle highly complex, mission-critical contracts. Our value proposition is found in the proven ability to serve as a trusted adviser to our customers. In doing so, we leverage our expertise and scale to help them execute their mission.

Current wording

Despite the budget and competitive pressures affecting the industry, we believe we are well-positioned to protect and expand existing customer relationships and benefit from opportunities that we have not previously pursued. Our scale, size, and prime contractor leadership position are expected to help differentiate us from our competitors, especially on large contract opportunities. We believe our long-term, trusted customer relationships and deep

Previous wording

We succeed as a business based on the solutions we deliver, our past performance, and our ability to compete on price. Our solutions are inspired through innovation based on adoption of best practices and technology integration of the best capabilities available. Our Innovation Factory develops superior enterprise-class solutions which are delivered to our customers as stand-alone solutions or integrated with and aligned to our product offerings to meet complex customer needs and accelerate the digital transformation. Our past performance was achieved by employees dedicated to supporting our customers' most challenging missions. Our current cost structure and ongoing efforts to reduce costs by strategic sourcing and developing repeatable offerings sold "as a service" and as managed services in a more commercial business model are expected to allow us to compete effectively on price in an evolving environment. Our ability to be competitive in the future will continue to be driven by our reputation for successful program execution, competitive cost structure, development of new pricing and business models, and efficiencies in assigning the right people, at the right time, in support of our contracts.

Current wording

We succeed as a business based on the solutions we deliver, our past performance, and our ability to compete on price. Our solutions are inspired through innovation based on adoption of best practices and technology integration of the best capabilities available. Our STG develops superior enterprise-class solutions which are delivered to our customers as stand-alone solutions or integrated with and aligned to our product offerings to meet complex customer needs and accelerate digital transformation. Our past performance was achieved by employees dedicated to supporting our customers' most challenging missions. Our current cost structure and ongoing efforts to reduce costs by strategic sourcing and developing repeatable offerings sold "as a service" and as managed services in a more commercial business model are expected to allow us to compete effectively on price in an evolving environment. Our ability to be competitive in the future will continue to be driven by our reputation for successful program execution, competitive cost structure, development of new pricing and business models, and efficiencies in assigning the right people, at the right time, in support of our contracts.

Previous wording

On July 4, 2025, the Act was enacted, introducing several significant changes to U.S. corporate income tax law. One key provision of the Act is the permanent reinstatement of the immediate expensing of U.S. research and development expenditures. Based on our interpretation, the Act results in an increase to our income taxes receivable with an offsetting decrease to our deferred tax assets and an immaterial increase to our effective tax rate for the year. These changes are reflected in our current period effective tax rate. We are awaiting interpretive guidance from the IRS, and therefore the current estimated impacts of the Act are subject to change.

Current wording

On July 4, 2025 the One Big Beautiful Bill Act (“the Act”) was enacted, introducing several significant changes to U.S. corporate income tax law. One key provision of the Act is the permanent reinstatement of the immediate expensing of U.S. research and development expenditures. These changes are reflected in our current period effective tax rate. We are continuing to evaluate the full impact of the Act, including the treatment of previously capitalized costs, and are awaiting interpretive guidance from the IRS. Accordingly, the estimated impacts of the Act are subject to change as we complete our analysis.

Previous wording

Adjusted operating income and adjusted EBITDA as a percentage of revenues for the nine months ended October 31, 2025 increased compared to the same period in the prior year primarily due to a recovery of costs from the settlement of a patent infringement matter and timing and volume mix in our contract portfolio, partially offset by the favorable resolution of the AAV contract termination in the prior year ($14 million).

Current wording

Adjusted operating income. Adjusted operating income as a percentage of revenues for the three months ended May 1, 2026 increased compared to the comparable prior year period primarily due to improved profitability and timing and volume mix in our contract portfolio, partially offset by contract completions.

Previous wording

Revenues. Revenues decreased $76 million and $120 million for the three and nine months ended October 31, 2025, respectively, as compared to the same period in the prior year primarily due to contract completions and ramp down in volume on existing contracts, partially offset by new contracts.

Current wording

Revenues. Revenues decreased $4 million for the three months ended May 1, 2026 as compared to the same period in the prior year primarily due to contract completions, partially offset by new contracts.

Previous wording

Adjusted operating income. Adjusted operating income as a percentage of revenues for the three and nine months ended October 31, 2025 increased from the comparable prior year period primarily due to improved profitability across our contract portfolio.

Current wording

Adjusted operating income. Adjusted operating income as a percentage of revenues for the three months ended May 1, 2026 increased from the comparable prior year period primarily due to improved profitability across our contract portfolio.

Previous wording

Adjusted operating income (loss). Adjusted operating income was $3 million for the three months ended October 31, 2025, compared to an adjusted operating loss of $2 million during the same period in the prior year primarily due to lower other selling, general and administrative expenses.

Current wording

Adjusted operating income (loss). Adjusted operating income was $7 million for the three months ended May 1, 2026, compared to an adjusted operating loss of $9 million during the same period in the prior year primarily due to a gain on an investment sale of $12 million in the current year and lower selling, general and administrative expenses.

Previous wording

Adjusted operating income. Adjusted operating income is a performance measure that primarily excludes the impact of non-recurring transactions and activities that we do not consider to be indicative of our ongoing operating performance. Adjusted operating income is calculated by taking operating income and excluding depreciation and amortization, acquisition, integration, restructuring, and impairment costs, and any other material non-recurring costs. Acquisition, integration, restructuring and impairment costs represent costs incurred related to acquisitions, the reorganization, facilities optimization efforts, and impairments of long-lived assets, along with associated depreciation. Recovery of acquisition, integration, restructuring and impairment costs represents costs recovered through our indirect rates in accordance with Cost Accounting Standards. Depreciation of property, plant, and equipment relates to property, plant, and equipment specifically identifiable for each segment. Adjusted operating income also excludes amortization of intangible assets because we do not have a history of significant acquisition activity, we do not acquire businesses on a predictable cycle, and the amount of an acquisition's purchase price allocated to intangible assets and the related amortization term are unique to each acquisition. Costs related to the settlement of federal tax audits represent costs related to the IRS audit settlement for fiscal years 2016 through 2019. Executive transition costs, net of recoveries, represent costs associated with the immediate departure of our CEO and other executives, net of the portion recovered through our indirect rates in accordance with Cost Accounting Standards. We believe that this performance measure provides management and investors with useful information in assessing trends in our ongoing operating performance and may provide greater visibility in understanding our long-term financial performance.

Current wording

Adjusted operating income. Adjusted operating income is a performance measure that primarily excludes the impact of non-recurring transactions and activities that we do not consider to be indicative of our ongoing operating performance. Adjusted operating income is calculated by taking operating income and excluding depreciation and amortization, acquisition, integration, restructuring, and impairment costs, and any other material non-recurring costs. Depreciation of property, plant, and equipment relates to property, plant, and equipment specifically identifiable for each segment. Adjusted operating income excludes amortization of intangible assets because we do not have a history of significant acquisition activity, we do not acquire businesses on a predictable cycle, and the amount of an acquisition's purchase price allocated to intangible assets and the related amortization term are unique to each acquisition. Acquisition, integration, restructuring and impairment costs represent costs incurred related to acquisitions, the reorganization, facilities optimization efforts, and impairments of long-lived assets, along with associated depreciation. Recovery of acquisition, integration, restructuring and impairment costs represents costs recovered through our indirect rates in accordance with Cost Accounting Standards. Costs related to the settlement of federal tax audits represent costs related to the IRS audit settlement for fiscal years 2016 through 2019.

Previous wording

EBITDA and Adjusted EBITDA. EBITDA is a performance measure that is calculated by taking net income and excluding interest and loss on sale of receivables, provision for income taxes, and depreciation and amortization. Adjusted EBITDA is a performance measure that excludes the impact of non-recurring transactions and activities that we do not consider to be indicative of our ongoing operating performance. Adjusted EBITDA is calculated by taking EBITDA and excluding acquisition, integration, restructuring and impairment costs, and any other material non-recurring costs. Acquisition, integration, restructuring and impairment costs represent costs incurred related to acquisitions, the reorganization, facilities optimization efforts, and impairments of long-lived assets, along with associated depreciation. Recovery of acquisition, integration, restructuring and impairment costs represents costs recovered through our indirect rates in accordance with Cost Accounting Standards. Costs related to the settlement of federal tax audits represent costs related to the IRS audit settlement for fiscal years 2016 through 2019. Executive transition costs, net of recoveries, represent costs associated with the immediate departure of our CEO and other executives, net of the portion recovered through our indirect rates in accordance with Cost Accounting Standards.

Current wording

EBITDA and Adjusted EBITDA. EBITDA is a performance measure that is calculated by taking net income and excluding interest and loss on sale of receivables, provision for income taxes, and depreciation and amortization. Adjusted EBITDA is a performance measure that excludes the impact of non-recurring transactions and activities that we do not consider to be indicative of our ongoing operating performance. Adjusted EBITDA is calculated by taking EBITDA and excluding acquisition, integration, restructuring and impairment costs, and any other material non-recurring costs. Acquisition, integration, restructuring and impairment costs represent costs incurred related to acquisitions, the reorganization, facilities optimization efforts, and impairments of long-lived assets, along with associated depreciation. Recovery of acquisition, integration, restructuring and impairment costs represents costs recovered through our indirect rates in accordance with Cost Accounting Standards. Costs related to the settlement of federal tax audits represent costs related to the IRS audit settlement for fiscal years 2016 through 2019.

Previous wording

Adjusted operating income and adjusted EBITDA as a percentage of revenues for the three months ended October 31, 2025 decreased compared to the same period in the prior year primarily due to the favorable resolution of the AAV contract termination in the prior year ($14 million), partially offset by timing and volume mix in our contract portfolio.

Current wording

Adjusted operating income and adjusted EBITDA as a percentage of revenues for the three months ended May 1, 2026 increased compared to the same period in the prior year due to improved profitability across our contract portfolio, a $12 million gain from the sale of an investment in the current year, and lower selling, general and administrative expenses.

Previous wording

We had net bookings worth an estimated $2.2 billion and $7.2 billion during the three and nine months ended October 31, 2025, respectively.

Current wording

We had net bookings worth an estimated $2.1 billion during the three months ended May 1, 2026.

Previous wording

Contract Types. Our earnings and profitability may vary materially depending on changes in the proportionate amount of revenues derived from each type of contract. For a discussion of the types of contracts under which we generate revenues, see “Business - Contract Types” in Part I, Item 1 of the most recently filed Annual Report on Form 10-K. The following table summarizes revenues by contract type as a percentage of each reportable segment and total SAIC revenues for the periods presented:

Current wording

Contract Types. Our earnings and profitability may vary materially depending on changes in the proportionate amount of revenues derived from each type of contract. For a discussion of the types of contracts under which we generate revenues, see “Business - Contract Types” in Part I, Item 1 of the most recently filed Annual Report on Form 10-K.

Previous wording

Cost of Revenues Mix. We generate revenues by providing a customized mix of services to our customers. The profit generated from our service contracts is affected by the proportion of cost of revenues incurred from the efforts of our employees (which we refer to below as labor-related cost of revenues), the efforts of our subcontractors and the cost of materials used in the performance of our service obligations under our contracts. Contracts performed with a higher proportion of SAIC labor are generally more profitable. The following table presents cost mix as a percentage of each reportable segment and total SAIC revenues for the periods presented:

Current wording

Cost of Revenues Mix. We generate revenues by providing a customized mix of services to our customers. The profit generated from our service contracts is affected by the proportion of cost of revenues incurred from the efforts of our employees (which we refer to below as labor-related cost of revenues), the efforts of our subcontractors and the cost of materials used in the performance of our service obligations under our contracts. Contracts performed with a higher proportion of SAIC labor are generally more profitable.

Previous wording

As a services provider, our business generally requires minimal infrastructure investment. We expect to fund our ongoing working capital, commitments and any other discretionary investments with cash on hand, future operating cash flows and, if needed, borrowings under our $1.0 billion Revolving Credit Facility and $300 million MARPA Facility.

Current wording

As a services provider, our business generally requires minimal infrastructure investment. We expect to fund our ongoing working capital, commitments and any other discretionary investments with cash on hand, future operating cash flows and, if needed, borrowings under our $1.0 billion Revolving Credit Facility and $300 million Master Accounts Receivable Purchase Agreement ("MARPA Facility") Facility.

Previous wording

Net Cash Provided by Operating Activities. Cash flows provided by operating activities for the nine months ended October 31, 2025 decreased $28 million compared to the prior year primarily due to timing of vendor payments, lower cash inflows from the usage of the Master Accounts Receivable Purchase Agreement ("MARPA Facility") in the current year, and other changes in working capital, partially offset by timing of customer collections, lower cash taxes paid, and lower incentive-based compensation payments in the current year.

Current wording

Net Cash Provided by Operating Activities. Cash flows provided by operating activities for the three months ended May 1, 2026 increased $27 million compared to the prior year primarily due to timing of vendor payments, lower cash incentive-based compensation payments, and other changes in working capital, partially offset by lower cash inflows from the usage of the MARPA Facility and higher interest paid in the current year.

Previous wording

Net Cash Used in Investing Activities. Cash used in investing activities for the nine months ended October 31, 2025 increased $222 million compared to the prior year primarily due to $203 million of cash paid in the current year for the acquisition of SilverEdge, net of cash acquired (see Note 4 to the condensed consolidated financial statements) and proceeds from the sale of equity method investments in the prior year.

Current wording

Net Cash Provided by (Used in) Investing Activities. Cash provided by investing activities for the three months ended May 1, 2026 was $1 million compared to cash used in investing activities of $15 million in the prior year period, primarily due to proceeds from the sale of investments in the current year.

Previous wording

Net Cash Used in Financing Activities. Cash used in financing activities for the nine months ended October 31, 2025 decreased $288 million compared to the prior year period primarily due to higher proceeds from borrowings, net of principal payments and debt issuance costs, and lower plan share repurchases in the current year.

Current wording

Net Cash Used in Financing Activities. Cash used in financing activities for the three months ended May 1, 2026 increased $107 million compared to the prior year period primarily due to lower proceeds from borrowings, net of lower principal payments, and higher plan share repurchases in the current year.

Previous wording

There have been no changes to our critical accounting policies and estimates during the nine months ended October 31, 2025 from those disclosed in our most recently filed Annual Report on Form 10-K.

Current wording

There have been no changes to our critical accounting policies and estimates during the three months ended May 1, 2026 from those disclosed in our most recently filed Annual Report on Form 10-K.